THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[14:30:00] BARACK OBAMA, PRESIDENT OF THE UNITED STATES: First of all, let's be clear, Chelsea Manning has served a tough prison sentence. So the notion that the average person who was thinking about disclosing vital classified information would think that it goes unpunished, I don't think would get that impression from the sentence that Chelsea Manning has served. It has been my view that, given she went to trial, that due process was carried out, that she took responsibility for her crime, that the sentence that she received was very disproportionate relative to what other leakers had received and that she had served a significant amount of time, that it made sense to commute and not pardon her sentence. And you know, I feel very comfortable that justice has been served and that a message has still been sent that when it comes to our national security, that wherever possible, we need folks who may have legitimate concerns about the actions of government or their superiors or the agencies in which they work that they try to work through the established channels and avail themselves to the whistleblower protections that have been put in place. I recognize there are some folks who think they're not enough. And you know, I think all of us, when we're working in big institutions, may find ourselves at times at odds with policies set, but when it comes to national security, we're often dealing with people in the field whose lives may be put at risk, or the safety and security and the ability of our military or our intelligence teams or embassies to function effectively, and that has to be kept in mind.

So, with respect to WikiLeaks, I don't see a contradiction. First of all, I haven't commented on WikiLeaks generally. The conclusions of the intelligence community with respect to the Russian hacking were not conclusive as to whether WikiLeaks was witting or not in being the conduit through which we heard about the DNC e-mails that were leaked. I don't pay attention to Mr. Assange's tweets, so that wasn't a consideration in this instance. And I refer you to the Justice Department for any criminal investigations, indictments, extradition issues that may come up with him.

What I can say broadly is that in this new cyber age, we're going to have to make sure that we continually work to find the right balance of accountability and openness and transparency that is the hallmark of our democracy but also recognize that there are adversaries and bad actors out there who want to use that same openness in ways that hurt us, whether that's in trying to commit financial crimes or trying to commit acts of terrorism or folks who want to interfere with our elections. And we're going to have to continually build the kind of architecture to make sure the best of our democracy is preserved, that our national security and intelligence agencies have the ability to carry out policy without advertising what it is that we're doing, but in a way that still keeps citizens up to speed on what their government is doing on their behalf.

But with respect to Chelsea Manning, I looked at the particulars in this case the same way I have with the other commutations I have done and pardons I have done, and felt that in light of all the circumstances that commuting her sentence was entirely appropriate.

The president-elect has said that he would consider lifting sanctions on Russia if they substantially reduced their nuclear stockpile. Given your own efforts at arms control, do you think that's an effective strategy? Knowing this office and Mr. Trump, how would you advise his advisors to help him be effective when he deals with Vladimir Putin? And given your actions recently on Russia, do you think those sanctions should be viewed as leverage?

[13:35:25] OBAMA: A couple of things. Number one, I think it's in America's interest and the world's interest that we have a constructive relationship with Russia. That's been my approach throughout my presidency. Where our interests have overlapped, we've worked together. At the beginning of my term, I did what I could to encourage Russia to be a constructive member of the international community and tried to work with the president and the government of Russia in helping them diversify their economy, improve their economy, use the incredible talents of the Russian people in more constructive ways.

I think it's fair to say that after President Putin came back into the presidency that an escalating anti-American rhetoric and an approach to global affairs that seemed to be premised on the idea that whatever America's trying to do must be bad for Russians so we want to try to counteract whatever they do, that return to an adversarial spirit that I think existed during the Cold War has made the relationship more difficult. And, it was hammered home when Russia went into Crimea and portions of Ukraine.

The reason we imposed the sanctions, recall, was not because of nuclear weapons issues. It was because the independence and sovereignty of a country, Ukraine, had been encroached upon by force by Russia. That wasn't our judgment. That was the judgment of the entire international community. And, Russia continues to occupy Ukrainian territory and meddle in Ukrainian affairs and support surrogates who have violated basic international laws and norms. What I've said to the Russians is that as soon as you stop doing that, the sanctions will be removed.

And I think it would probably best serve not only American interests but also the interests of preserving international norms if we made sure that we don't confuse why these sanctions have been imposed with a whole set of other issues. On nuclear issues, in my first term, we negotiated the Start II treaty

and that has substantially reduced our nuclear stockpiles, both Russia and the United States. I was prepared to go further. I told President Putin I was prepared to go further. They have been unwilling to negotiate.

If President Trump is able to restart those talks in a serious way, I think there remains a lot of room for our two countries to reduce our stockpiles. And part of the reason we have been unsuccessful on our non-proliferation agenda and our nuclear security agenda is because we were leading by example. I hope that continues.

But I think it's important just to remember that the reason sanctions have been put in place against Russia has to do with their actions in Ukraine. And it is important for the United States to stand up for the basic principal that big countries don't go around and invade and bully smaller countries.

I've said before, I expect Russia and Ukraine to have a strong relationship. They are historically bound together in all sorts of cultural and social ways. But Ukraine is an independent country.

And this is a good example of the vital role that America has to continue to play around the world in preserving basic norms and values, whether it's advocating on behalf of human rights, women's rights, freedom of the press. You know, the United States has not always been perfect in this regard. There are times where we, by necessity, are dealing with allies or friends or partners who themselves are not meeting the standards that we would like to see met when it comes to international rules and norms, but I can tell you that in every multilateral setting in the United Nations and the G-20 and the G-7, the United States typically has been on the right side of these issues. And it is important for us to continue to be on the right side of these issues because if we, the largest, strongest country and democracy in the world, are not willing to stand up on behalf of these values, then certainly China, Russia, and others will not.

You have been a strong supporter of the idea of a peaceful transfer of power --

OBAMA: Uh-huh.

CORKE: -- demonstrated not terribly far from here, in the Rose Garden. And, yet, even as you and I speak, there are more than five dozen Democrats that are going to boycott the inauguration of the incoming president. Do you support that? And what message would you send to Democrats to better demonstrate the peaceful transfer of power?

And if I could follow, I wanted to ask you about your conversations with the president-elect previously. And without getting into too much of the personal side of it, I'm just curious, were you able to use that opportunity to convince him to take a fresh look at some of the important ideas that you will leave this office with, maintaining some semblance of the Affordable Care Act keeping Dreamers here in the country without fear of deportation. Were you able to convince him and how successful were you?

OBAMA: Well, I won't go into details of my conversations with President-elect Trump. As I said before, they were cordial. At times, they have been fairly lengthy and have been substantive. I can't tell you how convincing I've been. I think you would have to ask him whether I've been convincing or not. I have offered my best advice council about certain issues, both foreign and domestic.

And you know, my working assumption is that having won an election, opposed to a number of my initiatives and certain aspects of my vision of where the country needs to go, it is appropriate for him to go forward with his vision and his values. And I don't expect that there's going to be, you know, enormous overlap. It may be that, on certain issues, once he comes into office and he looks at the complexities of how to, in fact, provide health care for everybody, something he says he wants to do, or wants to make sure that he is encouraging job creation and wage growth in this country, that may lead him to some of the same conclusions that I arrived at once I got here. But I don't think we'll know until he has an actual chance to get sworn in and sit behind that desk. And I think a lot of his views are going to be shaped by his advisors, the people around him, which is why it's important to pay attention to these confirmation hearings.

I can tell you that - and this is something I have told him -- that this is a job of such magnitude that you can't do it by yourself. You are enormously reliant on a team, your cabinet, your senior White House staff, all the way to fairly junior folks in their 20s and 30s but executing on significant responsibilities. And so, how you put a team together to make sure that they are getting you the best information and they are teeing up the options from which you will ultimately make decisions, that's probably the most useful advice, the most constructive advice that I've been able to give him. That if you find yourself isolated because the process breaks down or if you're only hearing from people who agree with you on everything or if you haven't created a process that is fact-checking and probing and asking hard questions about policies or promises that you have made, that's when you start making mistakes. And as I indicated in some of my previous remarks, reality has a way of biting back if you're not paying attention to it.

With respect to the inauguration, I'm not going comment on those issues. All I know is I'm going to be there. So is Michelle. And I have been checking the weather and I'm heartened by the fact that it won't be as cold as my first inauguration.

(LAUGHTER)

Because that was cold.

(LAUGHTER) Jenna Rodriguez (ph)?

[14:45:46] JENNA RODRIQUEZ (ph), CORRESPONDENT: How are you, Mr. President? Thank you for very much.

You have said that you would come back (INAUDIBLE) Dreamers. You said that a couple of weeks ago. Are you fearful for the status of the young immigrants and all immigrants in this country with the new administration? And just what did you mean when you said you would come back? Would you lobby Congress? Maybe explore the political arena again?

And if I may ask a second question, why did you take action on Dry- Foot, Wet-Foot (sic) in Cuba a week ago?

OBAMA: Well, let me be absolutely clear, I did not mean that I was going to be running for anything anytime soon, so.

(LAUGHTER)

No. What I meant is that it's important for me to take some time to process this amazing experience that we've gone through, to make sure that my wife, with whom I will be celebrating a 25th anniversary this year, is willing to re-up and put up with me a little bit longer. I want to do some writing. I want to be quiet a little bit and not hear myself talk so darn much. I want to spend precious time with my girls. So those are my priorities this year.

But as I said before, I'm still a citizen. And I think it is important for Democrats or progressives, who feel that they came out on the wrong side of this election, to be able to distinguish between the normal back-and-forth ebb and flow of policy. Are we going to raise taxes or lower taxes? Are we going to, you know, expand this program or eliminate this program? How concerned are we about air pollution or climate change? Those are all normal parts of the debate. And, as I've said before, in a democracy, sometimes you're going to win on those issues, sometimes you're going to lose. I'm confident about the rightness of my position on a lot of these points, but we have a new president and a Congress that are going to make their same determinations and there will be a back and forth in Congress around those issues, and you guys will report on all that.

But there's a difference between that normal functioning of politics and certain issues or certain moments where I think our core values may be at stake. I put in that category if I saw systematic discrimination being ratified in some fashion. I put in that category explicit or functional obstacles to people being able to vote, to exercise their franchise. I would put in that category institutional efforts to silence dissent for the press. And for me, at least, I would put in that category efforts to round up kids, who have grown up here and, for all practical purposes, are American kids, and send them someplace else when they love this country, they are our kids' friends and their classmates and are now entering into community colleges or, in some cases, serving in our military, the notion that we would just arbitrarily or because of politics punish those kids when they didn't do anything wrong themselves, I think would be something that would merit me speaking out. It doesn't mean that I would get on the ballot, anyway.

[14:50:18]With respect to Wet-Foot, Dry-Foot, we underwent a monumental shift in our policy towards Cuba. My view was, after 50 years of a policy not working, it made sense for us to try to reopen diplomatic relations, to engage a Cuban government, to be honest with them about the strong disagreements we have around, you know, political oppression and treatment of decenters, and freedom of the press and freedom of religion, but that to make progress for the Cuban people, our best shot was to suddenly have the Cuban people interacting with Americans, and seeing the incredible success of the Cuban-American community, and engaging in commerce and business and trade, and that it was through that process of opening up these bilateral relations that you would see, overtime, serious and significant improvement.

Given that shift in the relationship, the policy that we had in place was Wet-Foot, Dry-Foot, which treated Cuban immigrants completely different from folks from El Salvador or Guatemala or Nicaragua or any other part of the world, one that made a distinction between whether you got here by land or by foot. You know, that was a carryover of an old way of thinking that didn't make sense in this day and age, particularly as we're opening up travel between the two countries. And so, we had very lengthy consultations with the Department of Homeland Security, we had some tough negotiations with the Cuban government, but arrived at a policy which we both think is both fair and appropriate to the changing nature of the relationship between the two countries.

Nadia Bilbassy?

NADIA BILBASSY-CHARTERS, SENIOR CORRESPONDENT, AL-ARABIYA TV & MBC TV: Thank you, sir. I appreciate the opportunity. And I want to wish you and your family the best of luck in the future.

OBAMA: Thank you.

BILBASSY-CHARTERS: Mr. President you have been criticized and even personally attacked for the U.N. Security Council resolution that considers Israeli settlements illegal and an obstacle to peace. Mr. Trump promised to move the embassy to Jerusalem. He appointed an ambassador that doesn't believe in the two-state solution. How would worried are you about the U.S. leadership in the Arab world and beyond as an honest broker? Would this ignite a third Intifada? Will this even protect Israel? And in that respect, do you think you should have held Israel more accountable, like President Bush Sr did, with the (INAUDIBLE)? Thank you.

OBAMA: I am -- I continue to be significantly worried about the Israeli/Palestinian issue. And I'm worried about it both because I think the status quo is unsustainable, that it is dangerous for Israel, that it is bad for Palestinians, it is bad for the region and it is bad for America's national security.

And you know, I came into this office wanting to do everything I could to encourage serious peace talks between Israelis and Palestinians. And we invested a lot of energy, a lot of time, a lot of effort, first year, second year, all the way until last year.

Ultimately, what has always been clear is that we cannot force the parties to arrive at peace. What we can do is facilitate, provide a platform, encourage, but we can't force them to do it.

[14:54:49] But, in light of shifts in Israeli politics and Palestinian politics, a rightward drift in Israeli politics, a weakening of the President Abbas' ability to move and take risks on behalf of peace in the Palestinian territories, in light of all the dangers that have emerged in the region, and the understandable fears that Israelis they have about the chaos and rise of groups like ISIL and the deterioration of Syria, in light of all those things, what we at least wanted to do, understanding that the two parties wouldn't actually arrive at a final status agreement, is to preserve the possibility of the two-state solution because we do not see an alternative to it. And I've said this directly to Prime Minister Netanyahu. I've said it inside of Israel. I've said it to Palestinians as well. I don't see how this issue gets resolved in a way that maintains Israel as both Jewish and a democracy. Because if you do not have two states, then in some form or fashion, you are extending an occupation. Functionally, you end up having one state in which millions of people are disenfranchised and operate second-class occupants -- residents. You can't even call them citizens, necessarily.

And, so the goal of the resolution was to simply say that the settlements, the growth of the settlements, are creating a reality on the ground that increasingly will make a two-state solution impossible. And we believed, consistent with the position that had been taken with previous U.S. administrations for decades now, that it was important for us to send a signal, a wakeup call that this moment may be passing, and Israeli voters and Palestinians need to understand that this moment may be passing. And hopefully, that then creates a debate inside both Israeli and Palestinian communities that won't result immediately in peace but at least will lead to a more sober assessment of what the alternatives are.

So, we -- the president-elect will have his own policy. The ambassador or the candidate for the ambassadorship, obviously, has very different views than I do. That's their prerogative. That's part of what happens after elections. And, I think my views are clear. We'll see how they're approach plays itself out. I don't want to -- I don't want to project today what could end up happening. But, obviously, it's a volatile environment. What we've seen in the past is when sudden unilateral moves are made that speak to some of the core issues and sensitivities of either side, that can be explosive. And I -- what we have tried to do in the transition is just to provide the context in which the president-elect may want to make some of these decisions.

BILBASSY-CHARTER: (INAUDIBLE QUESTION)

OBAMA: Well, that's part of what we've tried to indicate to the incoming team in our transition process, is pay attention to this, because this is volatile stuff. People feel deeply and passionately about this. And as I said - as I've said, I think, many times, you know, the actions that we take have enormous consequences and ramifications. We're the biggest kid on the block. And, I think it is right and appropriate for a new president to test old assumptions and re-examine the old ways of doing things. But if you're going to make big shifts in policy, just make sure you have thought it through and understand that there are going to be consequences, and actions typically create reactions, and so you want to be intentional about it. You don't want to do things off-the-cuff when it comes to an issue this -- this volatile.